Intervention in SEC Proceedings and Substantial Recovery for Investors in Connection with $100 Million Ponzi Scheme
This case involved a $100 million Ponzi scheme masterminded by a New York resident named Perry Santillo and perpetrated by dozens of unregistered financial advisers across the country.
Problem
Mika Meyers was retained by investors in Michigan who had lost their life savings in the scam. Mika Meyers obtained a judgment for the investors, but just as arrangements were being made for payment on the judgment, the SEC swooped in and seized all of the fraudsters’ ill-gotten assets. The SEC planned to liquidate the assets and distribute the proceeds to the victims on a pro-rata basis, but the recoveries would have been pennies on the dollar because the proceeds were nowhere near sufficient to satisfy the victims’ claims.
Solution
Rather than accepting the pro-rata recovery, Mika Meyers went on the attack by filing a motion to intervene in the SEC case in order to assert a superior claim to the seized assets. The federal district court initially denied Mika Meyers’ motion to intervene. Undeterred, Mika Meyers refiled the motion. At the second time of asking, the court granted the motion, thereby allowing Mika Meyers to intervene on behalf of its clients. By doing so, the court sent a clear message to the SEC that Mika Meyers’ claim to the seized assets had merit.
Judgment
After intervening, Mika Meyers was able to negotiate a favorable settlement for its clients. The end result was that Mika Meyers’ clients got paid back most of their lost investments.
